MOUNT CARMEL COLLEGE

3200 BALER, AURORA

BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

CHAPTER 1

THE PROBLEM AND ITS SETTING

Introduction

Is fluctuation of peso a sign of weakening the economy? One of the familiar

question that continuous remind us that Philippine peso is seen to weaken further against

the dollar this year. According to Philippine star, Philippine peso is poised to sink until

the end of 2019.

Magkilat (2018) said that the peso has turned to become the worst performer in

region from used to be the best currency a couple years ago. A depreciated currency

signals something amiss in the economy, stressed business Jose Luis Yulo Jr., president

of the oldest business chamber in the country chamber of commerce of the Philippine

Islands (The chamber), who had seen the worst of the peso during the Marcos era.

“Overall, a week peso or depreciating peso affects people differently”, Yulo stressed

when the exchanged rate is high, there are both advantages and disadvantages. When the

peso is week, for one thing, we sell our products in the international market at lower

price. This, in turn, boost production and employment. Also when Filipinos back home

1
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

are enjoying the increase in remittance value, they get to enjoy higher purchasing power.

More consumption is generally better for economy. Diokno (2018) said in a statement

“For the nth tine, as an economist, what we need is a competitive peso – not a strong

peso; a STRONG peso does not mean STRONG economy; nor does a WEAK peso mean

a WEAK economy”.

Diokno said families of overseas Filipino workers, the business process outsourching

industry, export – oriented industries and companies that manufacture and sell products

that complete with imported goods all stand to gain from a weaker peso.

Fajardo (2016) a weak peso, however, makes our exports products cheaper to

foreign buyers. This encourage them to import more from us. With declining imports and

increasing exports, our net exports expands. The depreciation of peso also means that

every dollar remitted by our OFW’s could translate into more pesos received by their

loved ones. The rise in prices of inflation, especially for products with high import

contents, usually comes with a falling peso. This is not good. It hurts the consumers.

Among others, another consequence of the peso is the increase in the cost of servicing

foreign debts. When the foreign debts are dominated in dollars, a weak peso means that

now have to allocate more from the budget will now be left for government programs and

2
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

project. The best policy is to maintain stability in the exchange rate makes the future

more predictable. More predictability of the future makes business investments decisions

easier to make.

Fluctuation of Philippine peso means a strong dollar and this makes all the

imports in dollars more expensive in peso terms but a strong peso also means a weak

dollar in the Philippines. Moreover, there are advantages and disadvantages having a

weak peso and it is more good effects in the economy and to the Filipino citizens.

3
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

Research Statement

Fluctuation of Philippine peso means a strong dollar and this makes all the

imports in dollars more expensive in peso terms. Moreover, this study aims to gather

information about Fluctuation of Philippine peso and its effects to its economy.

Therefore, it sought to answer the following questions:

1. What had been the effects of fluctuation of peso in the economy for the last 60

years?

2. What had been the reasons for the lowering of the value of the peso from each

leadership?

3. What was the strong point in Philippine peso?

4
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

Significance of the Study

The study will help people become aware of our economy. The reasons for the

lowering or fluctuating of the peso will be explained. It is important to know and

understand the relation of peso with dollar. It will help for every people to know the

reasons of fluctuation of peso from each leadership. This study would also provide the

explanation about the strong point of peso.

The result of the study will have a great benefit to the following:

The Bangko Sentral ng Pilipinas. They are the one who is primarily tasked with

provision of among other things policy directions in the area of money, banking and

credit as well as overseeing and implementing monetary and financial programs.

Business man and Woman. This study will help them to know the reasons for lowering

of the peso for them to be aware what will be the effects of fluctuation to them.

The Economist. The role of economist is they are the one who research and analyze the

economic issues. This study will help them to analyze about the fluctuation of peso and

what will be the effects of this in Philippine economy. And they will forecast it with

articles periodicals or news so that people will be aware.

5
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

Definition of Terms

Affliction. The state of being affected by something that causes suffering.

Amiss. Not quite right; inappropriate or out of place.

Consumption. Is the using of goods and services in an economy, or the amount

of goods and services used.

Currency. Is a generally accepted from a money, including coins and paper

notes, which is issued by a government and circulated within an economy.

Debts. Is an amount of money barrowed by one party from another.

Decrease. To go progressively less, to make smaller in amount or number.

Deficit. An amount such as amount of money that is less than the amount that is

needed.

Dominated. Have a commanding influence on; exercise control over.

Depreciations. A reduction in the value of an asset with the passage.

Excessive. Going beyond what is usual, normal, necessary, and proper.

Exports. Sending goods or services to another country for sale.

Fluctuation. An irregular rising and falling in number or amount; a variation.

Inflation. A continual increase in the price of goods and services.

Increase. To become more progressively greater.

Incurred. To cause yourself to have or experience.

Imports. Bring goods or services into a country from abroad for sale.

Sink. To go down, to move down to a lower position.

6
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

Stability. The quality, state, or degree of being stable.

Sustainable. Able to last or continue for a long time.

Ultimately. The end of the process, period of time, most basic level.

Utilize. To use something for a particular purpose; to make use of.

7
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

CHAPTER 2

REVIEW OF REALATED LITERATURE

Foreign Literature

A devalued currency can result in “imported” inflation for countries that

are substantial importers. Currency moves can have a wide-ranging impact not just a

domestic economy, but also on the global one. Investors can use such moves to their

advantage by investing overseas in U.S. multinationals when the greenback is weak.

Because currency moves can be a potent risk when one has a large forex exposure, it may

be rest to hedge this risk through the many hedging instruments available according to

Segal.

The factors that determine the foreign exchange rate fluctuations. If you send or

received money frequently, being up-to-date on these factors will help better evaluate the

optimal time for international money transfer. To avoid any potential falls in currency

exchange rates, opt for locked-in exchange rate service, which will guarantee that the

currency is exchanged at the same rate despite any factors that influence an unfavorable

fluctuation according to Compare Remit (2019).

Our economic planners must pull their acts together according to StudyMoose

(2016). We still are not aware how the strong peso affects the small and medium

8
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

enterprises. If there is any benefit from the surging currency, the influence must be felt

locally in any way otherwise the natives will never be able to benefit from the situation.

According to Difuntorum (2008), the harrow exports base and increasing import

dependence of the country has negative implications to the manufactured export

performance of the country. First, it makes the country’s export performance vulnerable

to external shocks such as the changes in the demand for the country’s exports and

movements in the prices of foreign input. And second, it inhibits the promotion of the

country’s exports which are dependent on domestic inputs and also the promotion of the

country’s imports substituting industry which can be imports sources of export earnings

and where greater domestic value added can be generated.

According to Ruzima (2016), the relationship between inflation and economic

growth remains controversial. Accordingly, the results can be positive, negative or

neutral. Other studies concluded that the relationship between inflation and economic

growth but the moderate inflation rate or below there should has a positive relationship

between inflation and economic growth or no significant effects. Furthermore, the

nonlinear relationship between inflation and economic growth has shown that there

should level is high for developing countries than developed countries; this argument

9
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

supports the structuralist theory of inflation which says that inflation is important for

growth in developing counties.

10
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

Local Literature

According to Fajardo (2016), the peso exchange rate is determined by the supply

of and demand for dollars in peso terms or the supply of and demand foe pesos in dollars’

terms in the foreign exchange market. Its shows that excessive movement of the

exchange rate like the recent drastic fall of the peso is not necessarily good overall. The

best policy is to maintain stability in the exchange rate. A stable exchange rate makes the

future more predictable. More predictability of the future makes business investments

decisions easier to make.

According to Bandarlipe (2008), in an open economy, the exchange rate has been

considered an important variable that can assess the economic performance of an

economy overvalued exchange rates results from a restrictive trade policy that can

include deficits in the current account. Lifting the restrictions and imposing trade

liberation can only reduce such as overvaluation. It is investable that advancement in

economic growth is foreseeable the soonest. It is also hoped that more intensive

researches on exchange rates will focus on identifying the outcome of policies that the

government will impose considering that exchange rates have been an import and

determinant of a nation’s economic growth and development.

11
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

The interest rates and balance of payments directly influence the exchange rates

Ledina (2012) stated. A decrease in the interest rate leads to lower foreign investments.

Lower foreign investments lower the demand for domestic currency and the capital

account therefore; indicates balance of payment deficit. Thus, an increase the demand for

foreign currencies increases the exchange rates. The exchange rate, on the other hand

directly influences the money supply through its determination of value

(appreciation/depreciation).

These benefits show that our foreign exchange rates continue to be relevant and

appropriate according to Guinigundo (2017). The pesos’ flexibility, in more ways than

one, has allowed us to reap the benefits of structural reforms that we have put in place in

pursuit of sustainable growth. Rather than concentrating on achieving a weaker or

stronger peso, it is flexibility that we must support. Let us not forget Lao Tzu who said:

“Whatever is flexible and living will tend to grow; whatever is rigid and blocked will

wither”.

By improving exchange rate, the government must limit the deficit in the budget

according to Mariano, Sablan, Sardon and Paguta (2016). It is recommended that the

government must strengthen the revenue base by improving tax administration and that

12
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

will lead to a lesser deficit and help pay for the projects that must be prioritized. Another

one is that the government must practice expenditure control in order to improve the

deficit. Lastly, the authorities also plan to harrow down the list of tax and duty

exemptions to rationalize the investments incentive structure.

13
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

CHAPTER 3

METHODOLOGY

This study was completed with the method of comprehensive research and

interview. The method of comprehensive research used books, dictionaries and the

internet for reference. As the topic is about fluctuation of peso and its effects to its

economy the use of news and internet was highly needed. The information in this

research is required to be factual because it involves the effects of fluctuation in

Philippine economy so, further reading was conducted by the researcher to assure the

readers of the factual and significant information provided.

14
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

Questionnaire

Name: _________________________ Date: _____________

A. Please respond to the following questions by placing a check mark ().

YES NO
1. Do you think that if peso is strong like
other currencies in the world, we will
have a better economy?
2. Does the fluctuation of peso affect every
Filipino and the economy?
3. Does the Train Law affect the fluctuation
of peso?
4. Does the weak peso have a positive
economic impact?
5. As a Filipino citizen, do we need to worry
about the lowering of the peso?

B. Answer the following questions.

1. What is the possible cause of continuous depreciation of peso against the US

dollar?

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

2. As a citizen of the Philippines, in terms of everyday living, are you aware that
the amount of peso depreciates or fluctuate? In what way?

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

15
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

_______________________________________________________________
_______________________________________________________________

3. With a peso depreciation, Philippine exporters also believe that they become
more competitive in foreign markets, why is that so?

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

4. What do you think why a weak peso also fuels in inflation?

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

5. In government services, is there any effect if peso continuous to fluctuate in

its lower level?

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

6. What is the impact of fluctuation of peso to our OFW’s, is it positive or

negative?

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

7. What do you think is the alternative solution of the government in this

scenario?

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

16
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

_______________________________________________________________

8. What is the overall impact of fluctuation of peso on the Philippine economy?

_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________

17
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

CHAPTER 4

PRESENTATION, ANALYSIS, AND INTERPRETATION OF DATA

GATHERED

Presentation and Analysis Interpretation

I. The effects of fluctuation in the economy for the last 60 years.

Currency fluctuations are a natural outcome of the floating exchange

rate system that is the norm for most major economies. The exchange rate of

one currency versus the other is influenced by numerous fundamental and

technical factors. These include relative supply and demand of the two

currencies, economic performance, outlook for inflation, interest rate

differentials, capital flows, technical support and resistance levels, and so on.

As these factors are generally in a state of continuing changes, currency

values fluctuate from one moment to the next. But although a currency’s level

is largely supposed to be determined by the underlying economy, the tables

are often turned, as huge movements in a currency can dictate the overall

economy’s fortune.

The effects of fluctuation of peso for the last 60 years, currency effects are

far-reaching, while the impact of a currency’s rotation on an economy is far-

reaching, most people do not pay particularly close attention to exchange

rates, because most of their business is conducted in their domestic currency.

18
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

For the typical consumer, exchange rates only come into focus for occasional

activities or transactions such as foreign travel, import payments or

overseas remittances. In reality, though, an unduly strong currency can exert a

significant drag on the underlying economy over the long term, as entire

industries are rendered uncompetitive and thousands of jobs are lost. And

while consumers may disdain a weaker domestic currency because it makes

cross-border shopping and overseas travel more expensive, a weak

currency can actually result in more economic benefits. A currency’s level

has a direct impact on the following aspects of the economy: Merchandise

trade, this refers to a nation’s international trade, or its exports and imports. In

general terms, a weaker currency will stimulate exports and make imports

more expensive, thereby decreasing a nation’s trade deficit (or

increasing surplus) over time. Inflation, a devalued currency can result in

“imported” inflation for countries that are substantial importers.

II. The reasons of lowering of the peso in each leadership.

Filipinos believed that the era of former President Ferdinand Marcos as the “golden

age” of the Philippine economy. However, the economy in the Philippines during the

Marcos regime was rollercoaster state. The increase and decrease in the Philippines

economy transitioned dramatically through the pre-martial law, and during martial law.

Foreign exchange devaluation was generally difficult because of two major factors which

is the foreign debt problem caused by the Marcos administration and the balance of

19
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

payments crisis during the period, and the foreign exchange adjustments was not

accompanied by policies that could have softened inflationary pressure economic

quotient trade protection barriers through quotas and tariffs were reimposed between

1965 to 1969.

When Corazon Aquino became president, she inherited an economy that was

bankrupt and debt-ridden as a result of twenty years of misrule and mismanagement

under the Marcos regime. As president, Aquino focused her attention and energy to

revitalize and rejuvenate the sagging economy. One of her boldest moves was to

dismantle the various monopolies that were perpetrated by Marcos during his stay in

power. She also moved quickly to tackle the issue of the US$26 billion foreign debt

incurred by her predecessor. Instead of repudiating it, Aquino chose to honor all the debts

that were incurred previously under different administrations. Her decision proved to be

unpopular but Aquino defended it, saying that it was the most practical move and choice

to make as it was crucial for the country at that time to regain the confidence of investors

and the international community in the Philippine economy. Since 1986, the Aquino

administration has paid off $4 billion of the country's outstanding debts to regain good

international credit ratings and attract the attention of future markets. Nevertheless, the

administration borrowed an additional $9 billion, increasing the national debt by $6

billion within six years’ time since the ouster of former President Ferdinand Marcos in

1986. Ramos embarked on an ambitious development plan dubbed "Philippines 2000".

Under the plan, several industries critical to economic development were privatized, such

as electricity, telecommunications, banking, domestic shipping, and oil.

20
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

The taxation system was reformed, and external debt was brought to more manageable

levels by debt restructuring and sensible fiscal management. The annual inflation rate had

dropped to 5.9 percent from its high of 9.1 percent in 1995. The Philippine economy took

a sharp downturn during the Asian financial crisis of 1997. The peso depreciated (fell in

value) to P40.89 per U.S. dollar from its previous rate of P29.47 to a dollar. The annual

growth rate of the GNP fell to 0.1 percent in 1998 from 5.3 percent in 1997. Despite these

setbacks, the Philippine economy fared better than that of some of its Asian neighbors,

and other nations praised the Ramos administration for its "good housekeeping. Under his

administration, the Philippines enjoyed economic growth and stability. His visions of

'Philippines 2000' led the country into a newly industrialized country in the world and the

"Tiger Cub Economy in Asia".

In 1998, Joseph Estrada was elected president. Even with its strong economic team,

the Estrada administration failed to capitalize on the gains of the previous administration.

His administration was severely criticized for cronyism, incompetence, and corruption,

causing it to lose the confidence of foreign investors. Foreign investors' confidence was

further damaged when, in his second year, Estrada was accused of exerting influence in

an investigation of a friend's involvement in stock market manipulation. Social unrest

brought about by numerous bombing threats, actual bombings, kidnappings, and other

criminal activities contributed to the economy's troubles. Economic performance was also

hurt by climatic disturbance that caused extremes of dry and wet weather. Arroyo, a

practicing economist, made the economy the focus of her presidency. Based on official

(National Economic and Development Authority) figures, economic growth in terms

21
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

of gross domestic product has averaged 5.0% during the Arroyo presidency from 2001 up

to the first quarter of 2008. This is higher than in the administration of the previous recent

presidents: 3.8% average of Aquino, 3.7% average of Ramos, and 3.7% average of

the Joseph Estrada administration.

The Philippine economy grew at its fastest pace in three decades in 2007, with real

GDP growth exceeding 7%. Arroyo's handling of the economy has earned praise from

former "friend" and classmate in Georgetown, ex-US President Bill Clinton, who cited

her "tough decisions" that put the Philippine economy back in shape. A controversial

expanded value added tax (e-VAT) law, considered the centerpiece of the Arroyo

administration's economic reform agenda, was implemented in November 2005, aiming

to complement revenue-raising efforts that could plug the country's large budget deficit.

The country aims to balance the national budget by 2010. The tax measure boosted

confidence in the government's fiscal capacity and helped to strengthen the Philippine

peso, making it East Asia's best performing currency in 2005-06. The peso strengthened

by nearly 20% in 2007, making it by far Asia's best performing currency for the year, a

fact attributed to a combination of increased remittances from overseas Filipino

workers and a strong domestic economy. In Benigno Aquino III leadership the reasons of

the lowering of the peso is the lack of investments according to Secretary Arsenio

Balisacan . In Rodrigo Duterte’s leadership the one reasons for the lowering of the peso

is about what his administration created which is the Build, Build, Build project .

Because of this Build, Build, Build project the prices of the goods increasing and the peso

gets weak and the inflation rate occurs.

22
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

I. The strong point in Philippine peso.

When we say peso the strong point of this is the inflation and the deflation.

Inflation occurs when the price of goods and services rise, while deflation occurs when

those prices decrease. The balance between the two economic conditions, opposites of the

same coin, is delicate, and an economy can quickly swing from one condition to the

other. Inflation is caused when goods and services are in high demand, creating a drop in

availability. Supplies can decrease for many reasons: A natural disaster can wipe out a

food crop; a housing boom can exhaust building supplies, etc. Whatever the reason,

consumers are willing to pay more for the items they want, causing manufacturers and

service providers to charge more. Deflation occurs when too many goods are available or

when there is not enough money circulating to purchase those goods. For instance, if a

particular type of car becomes highly popular, other manufacturers start to make a similar

vehicle to compete. Soon, car companies have more of that vehicle style than they can

sell, so they must drop the price to sell the cars. Companies that find themselves stuck

with too much inventory must cut costs, which often leads to layoffs.

Unemployed individuals do not have enough money available to purchase items;

to coax them into buying, prices get lowered, which continues the trend.

When credit providers detect a decrease in prices, they often reduce the amount of credit

they offer. This creates a credit crunch where consumers cannot access loans to purchase

big-ticket items, leaving companies with overstocked inventory and causing further

23
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

deflation. Deflation can lead to an economic recession or depression, and the central

banks usually work to stop deflation as soon as it starts.

24
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

This data shows the interpretation of data that the researcher gathers towards the

fluctuation of Philippine peso and its effects to its economy.

YES NO

1. If peso is strong like other currencies in the world, we will have a 10

better economy.

2. The fluctuation of peso affect every Filipino and the economy. 10

3. Train Law affect the fluctuation of peso. 10

4. The weak peso have a positive economic impact? 5 5

5. Filipino citizen who worry about the lowering of the peso 10

Figure 1. Shows the number of respondents who agreed in fluctuation of peso and its

effects to its economy.

YES NO
1. If peso is strong like other currencies in the world, we will have a 100% 0%
better economy.

2. The fluctuation of peso affect every Filipino and the economy. 100% 0%

3. Train Law affect the fluctuation of peso. 100% 0%

4. The weak peso have a positive economic impact? 50% 50%

25
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

5. Filipino citizen who worry about the lowering of the peso 100% 0%

Figure 2. Shows the percentage of respondents who marked agreed in the effects of

fluctuation.

The data above show the percentage of the respondents about the effects of

fluctuation in Philippine economy. According to the data gathered, if the peso is strong

like other currencies in the world, Philippine will have a better economy having a 100%

of marked in agreed. The second is fluctuation affect every Filipino and the economy

having a 100% marked in agreed. The third is Train Law affects the fluctuation of peso

having a 100% marked in agreed. Train Law (Tax Reform Acceleration) affect the

fluctuation by recent inflation, the goods are being expensive. The fourth is Filipino

citizen who worry about the lowering of the peso having a 100% marked agreed, because

as Filipino citizen they need to be aware to the economy. However, in weak peso have

positive economic impact having a 50% in agreed and 50% in disagreed.Tit has a positive

and negative impact. In positive, the imports discourage and produce more exports, thus,

reducing the trade deficit over the medium term. While in negative they sell the products

in the international market at lower price.

1. Possible cause of continuous depreciation of peso against dollar.

Base on the survey, the possible cause of continuous depreciation of peso are

being not able to produce our product in other country, they are not capable to export all

26
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

product in other country, because of low quality the product has. In Marcos regime, we

are able to export our product in the country, and it will cause to become almost the same

at peso to US dollar. In addition, the demand of peso versus the demand for US dollar is

high, the value of peso will depreciate. The peso gets weaker if more dollars go out of the

country than what go in vice versa. Economic policies and debt of the Philippines to the

US is also a cause of continuous depreciation of peso, and changes in American policy

that affects different sectors in world such as investments.

2. Filipino being aware every day that the amount of peso depreciates or fluctuate in

different ways.

Almost of the respondents said that they are aware. The peso today has lower

value. Back then in 1000 peso bill you have it can buy many things but now it turns to a

less value. The peso bill now is lesser value compare in the late year. The rise in price of

basic commodities equate to inflation. It will always be based on the existing economic

relationship between two different countries, and the affliction status of a country in the

different global institutions like world bank.

3. Philippine exporters believe that they become more competitive in foreign

markets.

A weak peso, however makes our export products cheaper to foreign

buyers. This encourage them to import more from us. With declining imports and

increasing exports the net exports expands. Because of the ongoing policies of the

government and its good relationship to the different foreign country. Philippine peso

27
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

depreciate becomes favorable to our exporters which will create more job, it can increase

purchasing power specially the families of OFW’s (Overseas Filipino Workers).

Philippine exporters see depreciation as an advantage when they sell products at a lower

price compared to the prices their competitors are offering. Most likely, importers will

choose the exporters which sells with the lowest product price.

4. A weak peso fuels in Inflation.

A weak peso increases an inflation when the Philippines performs

poorly in terms of exports and imports of product. From the products with the high

import contents, usually comes with a falling peso. Weak peso fuels inflation one an

increases in the prices of goods that are available in the market. Ultimately passed on

to consumer’s higher production cost and handling cost incurred to them. They need

to buy goods from different country in a more expensive price.

5. The effects of continuous fluctuation of peso in its lower level in government

services.

Base on the survey, fluctuation is macroeconomic scale, meaning it

affects a big scale. Hence, the government is affected by fluctuation. The

government will perform weakly in world economy. In government the tourism

services are mostly the one who affect the economy, because tourism services

contribute to sales, profits, jobs, tax revenues, and income. The effects of this,

they are going to have a hard time to think what will be the solutions for not the

fluctuation will continue to its lower level. The government is depending also to

28
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

the peso value. If the peso has a lower value, the government will conduct a

program to increase the level of our own money value.

6. The impact of fluctuation of peso to OFW’s (Overseas Filipino Workers), positive

or negative.

Base on the survey many says it is positive. But there is also say that

there is negative impact. The following are the impact of fluctuation to the OFW’s:

 Positive because the depreciation of peso also means that every dollar

remitted by our OFW’s could translate into more pesos received by their

loved ones.

 Good income and increase of remittances is a positive impact.

 When there is rise in the value of peso, it affects the OFW’s negatively.

 Lesser work opportunity inside the country is a negative impact.

7. The alternative solution of government to this scenario.

Trade deficit is the root cause of peso depreciation which tends to a

higher inflation rate. Philippine economy experiencing imbalance economy. Government

is investing more on “build, build, build program” infrastructure, with an optimistic

projections of a surge investments that could add production capacity and create more

jobs in the country.

29
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

 Government should attract more investors and give more attention and

importance to the local producers and utilize our resources to decrease the

amount of imports.

 Create good and effective economic policy.

8. The overall impact of fluctuation of peso in Philippine economy.

The impact of fluctuation in economy they say sit affect more the

budget of our government, a weak peso means that it will n allocate more the

budget to pay annual interest of the foreign debts. Less of the budget will now be

left for government programs and projects.

The positive impact is it will have a good income and increase of

remittances. The economy will have a benefit because it will help to gain market,

share. The economy stays into poverty and peso or a single peso is only a single

coin without a value. The faster the inflation rate driven by food prices negatively

effects of peso depreciation and inflation that could raise expenses on food,

family expenses likes education, transport, medical and leisure. Do something to

fight inflation.

30
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

CHAPTER 5

CONCLUSION AND RECOMMENDATION

Conclusion

The researcher concludes that in an open economy, the fluctuation of peso has

been considered an important variable that can assess the economic performance of an

economy. Its appreciation reduces the price of competitiveness of tradable goods; hence

making it more difficult to compete with countries whom the economy is trading with.

The impact of fluctuation to the country’s manufactured export performance provide an

indication that: the overvalued exchange rate discriminates against some of the country’s

manufactured exports. The best policy is to maintain stability in the exchange rate makes

the future more predictable. More predictability of the future makes business investments

decisions easier to make.

31
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

Recommendation

The researcher would like to recommend her research to read by everyone to be

aware and well informed in our economy. The researcher also recommends this study to

the following researchers who will conduct a similar study about fluctuation. This study

will help Filipino citizens to know what will be the impact of fluctuation of peso in

Philippine economy. Additionally, they will improve their understanding about the

impact of fluctuation. This study is helpful to those who are interested to know what is

fluctuation and what is the effects of this in Philippine economy.

32
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

Bibliography

Fajardo, F. (October 6, 2016) The depreciation of the peso and impact on the economy.

Retrieved (November 18, 2018) from https://cebudailynews. inquirer.net

Ledina, L. Simple analysis on the relationship of peso and dollar exchange rates and

Philippine consumers price index. Retrieved (January 7, 2019) from

https://www.academia.edu/

Segal, T. (March 15, 2018) Effects of currency fluctuations in economy. Retrieved

(January 9, 2019) from https://www.investopedia.com/articles/forex/

Rada, J. (June 26, 2018) Weak peso seen to have positive economic impact. Retrieved

(January 9, 2019) from http:www.manilastandard.net/mobile/article

What are the impact of devaluation of currency on the economy of a country. Retrieved

(January 15, 2019) from https://www.researchgate .net/post/

Segal T. (March 6, 2019) Inflation vs. Deflation: What’s the difference? Retrieved

(February 18, 2019) from https://www.investopedia.com/ask/answers/

Shaffer L. (August 14, 2017) Asia’s worst-performing currency may get even weaker, but

its central banker isn’t worried. Retrieved ( February 18, 2019) from

https://www.cnbc.com/

33
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

Curriculum Vitae

A. Personal background

Name: Ica Ella S. Tayo

Date of birth: October 24, 2002

Place of birth: Baler, Aurora

Present address: Dela Torre Extension

Brgy.05 Baler, Aurora

Religion: Roman Catholic

Citizenship: Filipino

Age: 16

Sex: Female

Family background

Father’s name: Rafael Trapago Tayo

Occupation: Foreman

Mother’s name: Yolanda Tualla Subang

Occupation: Housewife

34
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

Siblings: Rainier S. Tayo, Christian Raf Tayo, Rain Paul S. Tayo, Rhon

Mark S. Tayo

Educational Background

Level School Year

Kindergarten Ruperto Zubia Elementary 2008 - 2009
School

Elementary Ruperto Zubia Elementary 2009 - 2015

School

High school Mount Carmel College Baler 2015 - 2019

Aurora

Senior High School Track/Strand: ABM (Accountancy Business Management)

College Course: Tourism Management

Philosophy in Life: “It always seems impossible until it’s done”

35
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

Index of Approval

This research paper entitled A STUDY ABOUT FLUCTUATION OF

PHILIPPINE PESO AND ITS EFFECTS TO ITS ECONOMY, made through

hardwork and sincerity by the researcher ICA ELLA S. TAYO, is a written proof that

she has accomplished her final requirement in English 10 (2018-2019).

________________________________________________

MISS EDDIE LYN P. LUMASAC

Research Paper Adviser

36
 MOUNT CARMEL COLLEGE
3200 BALER, AURORA
BASIC EDUCATION DEPARTMENT
JUNIOR HIGHSCHOOL LEVEL
S.Y. 2018-2019

Evidences

37